Don't Wait for a Recession Rescue
The economy has been a rollercoaster recently, to say the least, with supply chain issues, to staffing shortages for many businesses, not to mention record inflation. All of this is a perfect storm that has led to rumors of a recession on the horizon.
Although we don’t know if a recession is imminent, it’s always a good idea to prepare for the worst. After all, an emergency fund got its name for a reason. Rather than finding yourself in need of a financial rescue during times of a recession-like economy, why not breathe new life with your finances ahead of time and create a financial preparedness plan?
Here are a few ways to get ahead of a financial storm, so you can worry less if you ever need to tighten your budget.
- Build an Emergency Savings
- It is a good idea to have at least 3 months’ worth of your income in an emergency savings. If that seems like an unattainable goal, start with $500.
- Consider Your Refinancing Options
- Refinancing current loans can be a great place to start if you’re struggling financially. From refinancing your home or, on a smaller scale, an auto or personal loan, refinancing at a lower interest rate may be able to save you money in the long run of your loan, or it may lower your monthly payment which can add flexibility in your budget. Don’t forget to watch out for any early payoff penalties or fees.
- Know What to Cut or Negotiate Your Bills
- When it comes down to tightening your budget, immediately consider your needs versus your wants. Sure, we all want to binge-watch our shows, especially in times of financial stress, but if you really need to save the money, the first thing to go could be your cable, or streaming services. There are a number of other things you could ‘cut’, or consider giving a call to your providers to see if you can get a better deal.
- Create New Habits
- Get out of the automatic spending. Instead of having your card saved, if you have to input your debit or credit card number when you’re checking out online you may think twice before you hit the purchase button.
- Now might be a good time to practice discipline. Do you grab a coffee out every morning, or eat lunch out multiple times a week? Try only getting lunch 1-2x a week and making your coffee at home to see how much you could save in your budget.
- Waste Less
- It’s amazing the number of things we waste in today’s society. From food waste to packing your closets with clothing, we over-consume and under-prepare. Why not give meal planning a go so you know exactly what and how much food to buy. Or, consider ordering groceries for pick up so you do not have to go in the store and avoid the temptation to grab anything in sight that sounds good. Another option could be shopping second-hand instead of shopping new when it comes to clothing, household items, and more. You might be surprised at the deals you can find if you can get over the fact that something is gently used.
Throughout your financial journey, CSE is always here to provide you with education on your finances, or help you financially in times of need. Whether you want to get ahead by getting your finances in order now, or waiting until you need help, we will be happy to help when you are ready.
Need a little more help? Check out our ‘When Times Get Tough’ Banzai article. This offers some tips on how to trim your budget, provides an Emergency Fund Coach, and details on how to Weather an Economic Storm.
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